 Hello, I am Pia Malani, INET Senior Economist and Director of our Innovation Center. I'm delighted to welcome you today to INET's webinar, The Damage the World Economy, Peering into the Future, with Kashiq Basu, a member of INET's Commission on Global Economic Transformation. Dr. Basu is the Karl Marx Professor of International Studies at Cornell University and the President of the International Economic Association. He was Chief Economist of the World Bank from 2012 to 2016 and has served as the Chief Economic Advisor to the Government of India. He is the author of several books, including Beyond the Invisible Hand, Groundwork for a New Economics. Early in this webinar series, as we were beginning to watch the pandemic unfold, there was a hope that some of the poorest countries in the world would somehow be spared the worst health effects of the crisis. But then infection numbers began rising rapidly in countries like India and Brazil. And though we occasionally hear optimistic stories like the strides made by Taravi, one of the world's largest slums, in controlling the spread through grassroots efforts, or the Indian state of Kerala, or the country of Sri Lanka in controlling community spread, by and large the numbers in much of the developing world are quite distressing. And of course, alongside the health impacts are the devastating effects on unemployment and productivity. In early June, Kaushik, along with Ban Ki-moon, Amartya San and 225 other world leaders, put out a call for a $2.5 trillion response plan by G20 nations to address the health and economic fallout of the pandemic in the developing world. Today, he brings his extensive background in development economics and his experience advising both the World Bank and the Indian government to understanding what the effects of the pandemic might be on the economies of these countries and how the relationship between labor and capital will play an important role in determining their future. Kaushik, I'm very much looking forward to hearing your thoughts this morning. After the presentation, we will open it up for questions. So if you have any, you can go to the Q&A button at the bottom of your screen and type them in there and we will get to as many as we can. And with that, Kaushik, over to you. Yeah, thank you very much. Thank you to INET. Rob, I know, was trying to join and was failing. So in case he's there, so all of you, thank you for the opportunity to speak on this very, very important topic. And I should just also mention I've been associated with INET, but nevertheless, I can say that the important work that INET is doing is just so very needed today. So to be able to speak on this forum is particularly welcome. Thank you. I'm going to do something which I have been doing a bit of that these days, which does not help make make an economist popular, which is peering into the future. We have made wrong forecasts in the past and people tend to get upset. But there is really little choice. And what I'm going to do today is talk a little bit about contemporary times and policies, but look into the future. What might the world look like as we clamber out of the pandemic? Which other countries are not going to actually name the countries, but which kinds of countries will be in the forefront? Which ones will retreat? That's what I want to speculate starting from the current situation. So I will describe a little bit of the contemporary situation, some of our growing understanding of the pandemic and the interface between the pandemic and economic policy. And on that, I had a lot of firsthand lesson because I was caught in India and I was listening to details of what was happening. I will come to that in a moment. So we live in a transformed world really, as of now, and this is changing every day, 19 million cases worldwide, 700,000 more than that now, 710,000 deaths worldwide and it's climbing. Economies around the world are crashing and at one level, the economics and economies are receiving less of an attention because I feel as of now, the relatively well off are managing to protect themselves well. The brunt of this being is the pandemic and the economic consequences is being borne by the poorest and the weakest sections. And these are the sections that don't have adequate voice, so you hear less of that. And for me, I'm concerned about the damage that will be done by the pandemic, but also the damage that will be done by the economic fallout and that will come disproportionately on the poorest segments of today's population. Just to put the in perspective, this particular pandemic we, it's important we have to take it seriously, but we also must not get into a fear psychosis and anxiety psychosis by blowing it up. We've had, as of now, similar kinds of pandemics in the past 1968 was the Hong Kong flu with more than one million deaths. 5758 was the Asian flu with somewhat more than one million, quite a bit more than one million actually deaths, the speculation about numbers, those days the counting was not as clear, but say from 1.1 to 2 million deaths. As of now both those are bigger and of course the Spanish flu of 1918 was vastly huge. That's where we will end up. We are still the numbers are going up, but just to remind you and just to in some ways I want to also tell people that we have to take this in its stride that when I ask people about the Asian flu of 1968 where the deaths were almost the double what we've currently had hours may grow and beat that. But what we know from history it is a much larger number when I asked people about that. Lots of people don't even know my age group I was 16 years old when it happened. I actually didn't know till this one happened and I started reading and studying past pandemics the Spanish flu. Everyone talks about, but there have been other comparable and bigger ones which have come and gone and we've gone back into life. Will that happen this time I feel in some ways we will get back into life a similar life, but there will be also bigger changes because two reasons one is this pandemic has come in the midst of major technological change. So the brew of the COVID-19 with the economic changes that were taking place is very special number two. This is the first pandemic in the age of the social media. So it is changing our behavior, how we are reacting to it information is going back and forth every second every minute, and we are reacting to that that never happened in the past. And this is going to cause some changes. I am actually currently with some friends and economists working on the intertwining of the social sciences with epidemiology and the physical sciences because our behavior changes and that also in can fuel the pandemic. So that's what I've been speculating and working on. Before I get into the future and begin to share my PowerPoint, let me drag my PowerPoint in any way. Yeah. Okay, I'll hold that picture back for a moment. Yeah, good. I thought it was a point of no return with that, but doesn't matter if you see don't waste too much time reading about this because I'm going to come to this page in a moment. I have to start on a bit of a personal note. I had gone to India for a very short visit a couple of days in March to give a lecture. In fact, when the lecture got cancelled. Then the next day the flights got cancelled then the lockdown happened and I was actually there for three months in a lockdown in Mumbai, living out of a suitcase, but I was on the phone continuously on zoom continuously talking to people and getting a lot of the sense of what was happening there. India had a very, very severe lockdown. And we know that from the way it was done in retrospect we know that there were some mistakes, including one very big mistake, the handling of the migrant situation. I will come back to this. A lot of this is not anyone's deliberate doing. This was a totally a new situation and we were handling it as best as we could. But now there is more information coming in and we are beginning to learn and we have to do things better than we have done. Let's me start with some numbers. This is the numbers were collected two days ago. In terms of covid deaths. And I like to look at covid deaths or what is called the crude mortality rate that is you take a fixed population size say one million. And in each country you look at the number of people who have died in one million for a population there. One thing which is absolutely striking. So striking that you cannot ignore this is if you look at the rich countries, once you do population correction. The numbers. There's a huge pattern difference. And this is so big that you cannot ignore. There are covid deaths per one million population Belgium 850 India 28 UK 682 Pakistan 27 and you go down the list. There are a couple of European countries doing even better I think Norway is about 50 or so Iceland is very low so there are few. Basically it's hundreds going up to 850 Belgium and there are some absolutely tiny countries with even larger numbers. Whereas if you look at the entire swede of Africa and Asia. Virtually all countries look roughly the kinds of numbers I have in front of you India 28 Pakistan 27 Bangladesh 20 Sri Lanka 0.5 Ethiopia 3 China 3. Now this big difference. There's the one there are a few exceptions South Africa has now climbed into I don't know 126 or 127 so looking like a bit like the bottom end of Europe and North America. But otherwise this pattern is just huge. Can it be ignored my feeling is no we don't don't have an answer. It's also possible that entire Africa and Asia happens to be in the foothills of a similar client which is a terrifying thought that the numbers are going to go up that way but that also is a question. For six months after it has been raging in Europe and North America how come this region is in still in the foothills. So there are big questions that we don't understand but I want to point this out because there are individual countries in Asia and in Africa who will give their number. Compare it with Europe and North America and then point out that how wonderfully we are performing our government is doing well our policies are fantastic but once you compare with your region. The picture changes dramatically. There's a whole region doing better. There is a lot of speculation as to why the difference is there. One possibility is regions where you have got tuberculosis and people have taken preventives for that or malaria. These have been speculated. No one has the answer and not for a moment would I be foolish enough to offer an answer but the difference in pattern is not just measurement problem. Say India is undercounting deaths, COVID deaths, instead of 28 per million it is 56 per million still just nowhere near. If it's 100% undercounting it's nowhere near. As for the one of the reasons by the way and since I'll show some numbers I should clarify. I like to look at COVID fatality or crude mortality rate rather than the cases is case undercounting in developing countries is much bigger. The testing is more sparse and if you don't do enough testing you will not pick up the cases but fatality when it happens the undercounting is not that much lower. Yes, you're missing out on some you're mislabelling some but when a death is occurring typically you get to know. So once you look at COVID deaths and compare the differences are indeed start and important and cannot be ignored. One thing which happened after this. In terms of policy and this is is of interest to me I was sitting in India when the Indian lockdown happened. 24th of March. It was by some measures the most severe lockdown anywhere in the world the Oxford study puts it as the number one lockdown and I am currently doing a study of 13 countries and India's right there at the top. South Africa was also very very severe the lockdown. The initial lockdown in India was a bit of a blunt measure you just ask people to stay at home and don't move out that's it you freeze everything. The quick action was thought of as good and early action was taken and I felt certain sitting that time in Bombay that there must be lots of Ancillary policies which are in place but unfortunately what became clear is that there were no ancillary policies, at least nothing visible. So what happened within weeks and then it spread out was the migrant problem that everyone saw that the migrants lost their jobs migrants who had traveled 200 miles 300 miles 500 miles for jobs. They lost their jobs. They were sitting frozen in different places in clusters and huddled. And after sometime when they realized that they don't have jobs. They will perish. They don't have enough savings. They started walking back home which was one of the biggest movements that you saw in recent times of migrants moving home. What happened from that is now clear at because India in the Asia and Africa region. India is among the bottom one third of nations in terms of performance it's performing rather badly is that the migrants scattered the virus. So the numbers began picking up India for instance if you look at debts India 28 Pakistan 27 if you go back about a month. Pakistan was three times higher than India in debts because it had taken some inflow from Iran into Pakistan, whereas India is now climbing by the day and has crossed over Pakistan very recently. And a part of this is to do with the migrants scattering this. Now my feeling at that time is was that the lockdown. Not immediately right at the beginning who knew what is correct I didn't know the government's didn't know I did not know. But soon I began to feel that the lockdown has to be more nuanced curated to knock down lockdown because the economy has to be kept in mind. Richer countries can in fact go for a more severe lockdown and some of them should have done more of a curated but more severe lockdown, because for them they have the economic where we don't. Whereas the emerging economies developing countries don't really have that. And I was in some discussions with the World Bank where we were looking at the African countries and I was actually very worried that if you freeze a country so totally. You will have problems in terms of unemployment problems in terms of jobs being new jobs being created, and people savings vanishing altogether. So the lockdown of the kind that was being done in India, South Africa, many other countries were worrying me, and one country which I actually wrote about earlier, somewhat sheepishly and worried because that country was getting a lot of criticism was Ethiopia. Did the lockdown early enough date, they took some early measures, then when in March. The COVID was spotted and spreading by April 8 they went in for a lockdown, but the lockdown was very different. It was not a total lockdown transportation was kept up in the belief that people need to get to work. The airports were getting being treated very well, Alisababa mainly, but the airport was kept functioning with lots of security measures and health measures there, unlike in many other countries, it was there. Market was kept open, but a huge indoor market was made into an outdoor market, it was moved out, people were allowed to be in open space, but it was allowed to function. It was a set of rules being put into place, detailed rules, but with a fair amount of the economy being allowed to function, and Ethiopia was getting a lot of criticism, and I also felt it's a risky move. But now if you look at numbers, the numbers have gone in a way that you feel maybe that combination of allowing the economy to function and doing a curated lockdown is what was needed. Let me turn to the next page. Claire, if I may. Yes, let me quickly take a look at this. This is don't waste your time. I've just got the four South Asian countries since I was looking at the numbers. It's climbing everywhere, but if you put them together, this is the cases. Let's go to the next page. These are the deaths per million, which is what I actually most of the time look at and let's go to the next page. This is and let me go to the next page. This is what I've already talked about South Asian deaths per million. And the vertical lines that you have here are the lockdowns in the four countries. I've got four countries over here. You're looking at the lockdowns and the green one is India. India's going up steadily. The red one is Pakistan Pakistan was very high. It's beginning to slow down. You've got Bangladesh, the yellow one and Sri Lanka at the bottom, which is flat Nepal also looks pretty much like Sri Lanka. It's controlled pretty well. So this is the picture. Let me go to the next page. This is the India and Ethiopia comparison I was giving you. Once again, you have to be careful that we don't know so much about this virus that you don't even know whether the geography of Ethiopia played a role. So all kinds of things are possible, but the this is the cases per million. Let's look at the deaths per million the next page. The gap is just huge started out very similar. India goes in for a lockdown. Ethiopia goes in for a lockdown. But remember, Ethiopia's lockdown is a very, very curated lockdown. And one of the things that I want to stress. And now that we may get into a second wave is, I feel a lot of damage has been done by using one word lockdown. So you're thinking of lockdown being from zero to one total lockdown, complete free movement, but lockdown is very, very multi dimensional. You can tell people that look, you are allowed to go to work, but you have to be six feet distance, you have to wear a mask, but you can do that. You can allow vehicles to function but say that buses will play, but buses will carry one fourth the normal number of passengers, you have to sit spaced out. There are many different ways of doing it. And now it is clear that we have no choice, but we have to think of the curation of how the rules are being followed, and what kinds of nuance that you want to put into the lockdown so that the economy does not function too much. One more point which I've recently written about. There are two ways in which you control human behavior. One is the heavy hand of the law. You're allowed to do this, you're allowed to do that, have a series of rules and regulations coming down from the government. The other is to provide. I'm just wondering, are you getting any background noise then I will put on my earphone and plug it in. Okay, fine. Yeah. So, see, this is a bit of an analytical academic remark, but I do want to point this out that there are two ways in which human behavior is controlled. One is through the heavy hand of the law and the police. And the other is through social norms, suggestion regulation leaders who are respected leaders speaking up and telling people to behave in certain ways. We believe that we must not make the mistake of everywhere using the heavy hand of the law, because that has a risk that authoritarian governments begin to use the heavy hand of the law to crush a lot of the normal functioning of the economy. Here's one little example from Ithaca about the importance of the functioning of society made possible by the space that we individuals have. It's just so very important that we cannot play that down. In Ithaca, there is a bridge over a little rivulet called the bridge over forest home drive. The bridge only cars in one direction can move. And with that you can have two kinds of things either you have a firm rule that there'll be a one way traffic, or you have a rule, say that the traffic will be in alternating one car goes in one way and then you pause and another car comes, which is a very wasteful thing because one car goes and a lot of the space behind it is unoccupied. What happens in Ithaca is that there is no rule. But being a small town, a custom has developed. Three, four cars go in a convoy, then you just stop, let three, four cars come in from the other side in a convoy. That creates a huge efficiency. This is just one trivial example. Life is full of that where once you understand the risks of the pandemic and you get some leadership cues that this is where you wear a mask. You don't wear a mask. You begin to fine tune those rules that if you are with people who are leading the life that you're leading exactly the same. The mask is of very little use because either you are exposed and they are exposed or you're not exposed and they are not exposed, and you begin to create rules. My little bit of worry is that you will see the heavy hand of the government because of the politicization of this debate. Are you for rules being brought in or are you for freedom as if it's on a line that you're taking a decision. Conversation has gone very hard. I myself feel very self-conscious when I do this because I don't want anyone to misunderstand that I am saying that leave people free without masks to run around wild. For a moment I'm saying that but I am allowing for space for individuals and I think this is very important. Many economies will come out quite crushed out of what is happening right now simply because of the heavy hand of the government is going to take them back into that. Where are we heading and where will the world end up. During this time there will be winners and losers and I am a bit worried I feel for I take the example of India a little bit because I feel in many terms of many of the fundamentals. India is very, very well placed and should strictly be able to come out on top in a post pandemic world but I am worried about India and I will tell you in a moment why I'm worried about India but I want to first give you a reason as to why India has certain fundamentals which are very strong. I believe that when you come out into the post pandemic world when the worst is over hopefully from early next year. Even if we have not got a vaccine, we've learned to live with this sufficiently and the fury of the pandemic has gone down we are getting into a post pandemic world. I feel and after that and I am speculating about the next 10 years, 15 years, what will the world look like. My expectation is that information technology and outsourcing is going to grow. It's going to be a huge big part of the world and the reason for that is very simple. These six months that we've already spent and maybe the another six months that we will spend like this is improving our outsourcing and information technology skills in leaps and bounds. We will learn to give lectures routinely by using the technology that I'm using now and outsourcing which was already beginning to grow will grow. My view is that the world will become a much more technologically linked even if people are moving less, we will be a more linked world. So the IT sector will grow and outsourcing businesses going to grow in leaps and bounds. India has had initial strength in that. In the 1990s after India reformed and opened up India was the world leader in terms of the long distance work people would be sitting in Bangalore and other places and be working for the world. So this sector is going to grow India has fundamental strengths over there. Another sector that is going to grow. I feel pretty certain appearing into the future is health. One of the lessons of the pandemic and the deteriorating environment in the world is that we have to consume much less of the typical things that we consume more cars, more luxury homes, those things we have to consume less. But I don't for a moment want growth to go down. There are lots of people who say that we have to grow less. You have to realize that the components of growth is what is important and what is growth growth is an expansion in what we value. If we change our values, the components of growth will change and I feel going into the future. There's going to be a huge expansion in health consumption. In many ways there's going to be more research in health so longevity will increase health will improve in leaps and bounds and health care where really we live in a world which is shameful that so many people get such poor health care. When we have the scientific where with all of reaching better healthcare to people. I think we are going to live in a transformed world where the health sector is going to be much larger and the education sector will be much larger. There will be lecturing by zoom lecturing by teaching and the consumption of knowledge is going to be larger. That's going to be the world that we will come into in the post pandemic world it and outsourcing sector huge health sector growing and education sector growing. Let me go into the next page and I'll tell you why the technology let me spend a little bit of time on that. The reason why I expect this sector to grow is that the trend was already there and the pandemic is simply hastening the process. What you have in front of you is a graph that shows over the last 40 years say 1776 to 2016. The share of the GDP so if you take the country's national income, the share of it which goes to workers as wages. Popularly known this is now a lot of research has been done by economists economists who just do this kind of a thing actually very regularly and across the ritual and also across basically all upper middle income economies and even some lower middle income economies. The share of the GDP that is going to workers is dropping and dropping in ways which is dramatic. Look at Japan here in 1776 roughly 77% of Japan's income would go to workers as wages that has now come down to about 59 60% similar Japan is a very sharp movement but the trend is the same in every country workers are getting less and less of the share. So when the technology technological change gets speeded up, you are going to see a worsening of this. So there are two changes that are the technological change there are two kinds of change taking place. One is the old fashioned labor saving technology we have lived with that from the time of the Stone Age. The little stone equipments that were being developed were equipments that were replacing labor with more efficient methods of doing that. That's continuing, but now we have a new technology, which I refer to as labor linking technology technology which links labor in different parts of the world. I'm sitting in Ithaka you're sitting in different places. You're listening to my lecture. Outsourcing business is exactly that business. People sit in a far away country far away city work for customers all over the world for a corporation that may have a headquarter in yet another place. That technology is causing the in rich countries, the share of wage to fall, but here is a reminder. This is a trend that is going to continue. There is nothing we can do about it. No one is doing this individually. It is as inevitable to me as the process of gravity. No one does it, but it's there. This also no one individually does it, but it's a collective process that will continue. So we have to live with this world. Here is one and in the end I will talk and a little bit about policy. You have to realize that every time the share of the wage goes up goes down in a country. There is a small gain by much poorer workers in other countries who are able to work. We must not grudge that. What we should worry about grudge no one and nothing really, but what we should worry about is every time this rate share goes up profit goes up. The profit share goes up the rental goes up in the country. So very often it is politically it's made out to be that this is a labor versus labor tussle workers in rich countries with workers in poor countries one hour able to work and through the outsourcing means, but it is also a labor versus capital tussle that every time there is outsourcing profit goes up in leaps and bounds. And we have to think of ways of redistributing this in the future because the kind of change I'm talking about will happen. I think will happen. We will have to learn to live with this. Will there be de-globalization after the pandemic eases up in the post pandemic world? Well, initially, there will be a tendency for de-globalization. With China, there is a lot of anxiety and worry vis-à-vis China, there are countries trying to pull down their shutters. United States and China, the relations are deteriorating. Two of the biggest economies, if they pull down their shutters, the world is beginning to retreat from globalization. And the movements of people will remain slower than what we have seen in the past. But will there be any major de-globalization? I don't think so. For the following reason, globalization is largely a natural process. It's done by human beings, but millions and billions of human beings going about their daily chores. There is nothing that you can do to stop. If you artificially try to stall it, put up barriers, put up walls and boundaries and try to stop, you will create a bizarre system. And what will happen is the following. The countries that block, surround their countries and wall up their countries will get outcompeted in the product market. I'm saying something very definite here, so let me explain this a little bit. Suppose United States decides that we will close down our doors, no more outsourcing, all work is going to be done within the country. Allegedly, the wage component of the work is going to go up because you're not using a cheap resource which is available in far away countries. And if you block your country from using the cheap resource, another country that uses that resource. Suppose say Germany says, well, we will use the cheap labor, cheap material that we are getting elsewhere. Then United States will get outcompeted in the product market because the US production cost is high, other countries are producing cheap. So in the product market you get outcompeted because you're not using the cheap resource which is available elsewhere in the world and other countries are using. And I feel historically United States has done so well because of its openness and the two striking examples are with Argentina, Argentina went into a very hyper nationalistic phase from 1930 to 1934 putting up tariff sky high and was closing down United States was beginning to open up it took a long time was opening up. In 1980s Japan was about to out compete United States per capita incomes absolutely neck to neck. Not that Japan went in for a closed economy policy, but United States remained open with the best of talents coming in picking up the best resources available in the world and United States grew much faster than Japan. So there are historic examples so my view is that the deglobalization may continue for a few years, but two things will happen. Smarter countries will not pull down the shutters they will remain fairly open they will take precautions they will work with the world, and they will out compete the other countries, so the world will go back into a globalized world. Where will we come out of this in the end vis-a-vis developing countries, my own worry about countries like India which were extremely well poised because India's pharmaceutical sector is strong and India's IT sector is very strong. The worry vis-a-vis India is India's growth slowdown began. Not with the pandemic with the pandemic India has been hit very badly in the month of March and April. Sorry April and May, India's unemployment rate reached more than 24% it was 24.5% shockingly high unemployment rate and you can see why that happened. A total lockdown freezing everything means people are just thrown off their jobs altogether. So during the pandemic India has done badly and the India's growth forecast for next year is going down steadily. That also would not have worried me. One or two years the pandemic is a time of uncertainty India will climb back. My worry with India is India's growth slowdown began before that. From 2016 every year India's growth is lower than in the previous year so five years of lower growth each year. Many things are beginning to drive that and it's worrying me one is also the country has become extremely divisive, politically divisive. A deficiency of trust which is such an important ingredient of economic performance. Francis Fukuyama wrote extensively about it. A society that has trust it's not just good for that society. That society tends to grow faster but there is a deficiency of that. If these are not reversed India may come out of the pandemic into a post-pandemic world with a huge retreat. Anyway it has already dropped. It was among the fastest three fastest growing countries in the world from 2005 to 2008. India's now dropped to the 43rd or 44th fastest growing growing country it's dropped. Next year most of the projections coming is India is going to be hit very very badly in terms of growth. So it's ranking struck a lot depends on how it comes out into the future but unless the political divisiveness is corrected. I feel the India story will come to an end which will be a very big tragedy and if we look at capital flows during the pandemic. In the month of March India saw a capital outflow bigger than ever before no recorded one month of that kind of a capital outflow. So there are worries but I keep my fingers crossed that we will have political sense and the country will reach out across different groups and do what it was beginning to do so successfully. After its independence is working as a democracy secular democracy which is the ingredient of long run growth. So that's where we are on that I want to just spend. I've gone over my time perhaps by one or two minutes if I take five minutes on. Absolutely as long as you need cash signal problem. Let me take that a little bit. Where do we go from here what kinds of policies are we looking at into the world if the world is going to come out of the post pandemic world bigger IT sector so globalized through technology even more. We managed to change our consumption pattern so we don't destroy our humanity by bringing down the environment if we manage that no 100% guarantees we could still go the dinosaur way it's possible. But if we managed to make these changes we are coming out of this presumably in a hopefully better world. But there will be other challenges inequality because of the graph in front of you that you have and this is going to get accentuated. Inequality is going to rise and it's an inequality level people debate about whether we have inequalities going down or increasing or decreasing. At one level to me, that's not a very interesting debate any quality is far too high. It's crazily high. It's intolerably high and we have to do everything that we can to bring this down. So there are a couple of speculative ideas that I want to put place on the table. Before that I will just preface that by pointing out that these are radical ideas that I'm going to suggest right now they sound very very radical because these are new ideas new I don't want to sort of say that. It's ideas that I'm bringing to the table. There is a small category of people around the world who are bringing these ideas. We just have to remember that during the Industrial Revolution, ideas that were brought in that time were thought of as crazily radical. When the income tax was brought in for the first time formally there were little bits of income taxing earlier, but when it was brought in in 1842 in Britain, people said this is a crazy radical idea. No longer does it appear radical to us. We are in that kind of a juncture in the world where we have to think of radical ideas and here is one that I want to point out. As the wage share drops and the share of profit goes up, we are going to be hit by this also at the level of digital firms, big firms, Amazon, Alibaba. Their profit is going to rise sky high because all trades are going to take place through these couple of big firms. What do you do about this? There are many people saying that we have to use our antitrust law better. The Sharban Act of 1890 in the United States is a very powerful act. We have to use that and break up these firms, but you can't break up these big digital firms because the big digital firms. The advantage is the bigness, the largeness. You can't break them up. So what do you do? Here are the kinds of things that you have to think about. One is at one level it would not matter if all the profit in the world was earned by one big firm. As long as the shareholding was widely dispersed. So all the profits going to one firm, but it's so widely dispersed the shareholding that the profits going to various pockets of hundreds and thousands of people. It is possible to think in terms of dispersed shareholding rules where you allow a company maybe the first 14 years where, yes, the initial investors want to make big profits, you give them that space. After that, you have to allow for you have to insist on dispersed shareholding. Also for countries nations, you have to think in terms of maybe a fraction of the profits, almost like shares owned by the government, which is actually collectively owned by the workers. So the workers own these shares and they earn. So as the labor rate share goes down as in the picture in front of you and the profit share goes up a part of the profit goes back to the workers, because they are on the shares of this huge a parcel in the country. We have to think of that. There is also a more radical thought and inescapable that one or two of the biggest digital firms in the end may have to be made non profit. And I'm very conscious as an economist that the profit motive cannot be killed everywhere we've made that mistake historically you damage the economy you create if you pull in all the profit in the hands of the state that becomes chronic capitalism that gets captured happened in the USSR, not for a moment. Am I saying that, but if you have a digital firm such that every activity in the economy has to go through this digital firm, you may have to think of this digital firm having to become non profit India's central bank, the Reserve Bank of India, when it started in 1935 was a private bank. That was making profits, but a money creating authority that makes profit and everyone has to use this money. So there is only one window to come into the Indian economy through the central bank. And if you are soon realized, you can't have this as a private body, a central bank has to be a non profit body. In the digital world, we may have to think of a couple of the biggest digital firms, ultimately will have to be like non profit organizations, a thought that has to be kept in mind. This is by the way, I'm doing a full fledged paper with two co authors, Bob Hockett, who also has been participating in a net law professor at Cornell and one of my students, Aviv Kaspi, who is a student of economics at Cornell. So we are doing some work on that. So we have to think in terms of that, we have to think in terms of changing the constituents of growth. So that growth is we don't get a setback in growth, but the components of growth are different what we are consuming human mind, the human mind is such that we can our target what we want to strive for in life can shift and change. For me, the most obvious example of that is sports. kicking a ball through a goalpost at one level is a meaningless activity. But once you get people whipped out about the excitement of doing that, people can rush to do it. So we can create societies where we are striving for very different kinds of things than what we strive for today. And we need global leadership woefully lacking in the world really woefully lacking in the world. We need global leadership so to give people the urge that you the components of growth become different as we come out of this pandemic. So let me just end by saying that we are going to come out into a very different kind of world or we are not going to come out at all. When we come out into this very different kind of world we have to adjust and adapt to this world for that to be a flourishing society to be possible once again. I do think it is possible. And since we have such poor leadership in the world, I appeal to ordinary citizens and ordinary people in the world, do keep your moral compass active in your head. And in your political engagement keep that on that we want to come out of this into a better world, which our future generations will be able to cherish and enjoy with that let me wish all of you the very best in the days to come months to come and I'm happy to take any questions. Thank you very much. Kaushik, thank you. That was filled with some very provocative and really interesting ideas and it's actually very helpful I think for us to look a little bit into the future and see where we're going. And, you know you've tied your comments to some of the issues that we've been having in the past with globalization as we look forward and you know it's very interesting to me that you really very clearly draw the link between the share of labor and what's happening in terms of globalization and point to the fact that we didn't do a good job of managing how we handle globalization in the past in terms of its link with inequality. And my question is, going forward, do we really have a reason to believe that we have the ability to change that is not, you know, big tech is definitely a big part of it and I think these are very provocative ideas in big tech which I'd love to explore a little bit more deeply. I do think that if we look at the falling growth rates in India, for example, automation with respect to tech is going to play a huge role in developing countries just like it's been playing a big role in the developed world so far. But do we really have a reason to believe that as we start to move forward if we globalize that we're going to have a better way of managing the inequality issues. Yeah, I'm glad you raised this. I'm not completely sure that we will have the wisdom to do that, but I am hopeful and let me just explain that is first of all, certain kinds of globalization you can put a stop to but the technology linkage I think is going to increase in leaps and bounds when we come out of the pandemic. So the digital globalization is going to grow. I don't think there's any way of stopping that so that's almost natural phenomenon now because it's going that way. I hope that and we'll be have the sense for radical policies. My little bit of hope is the following. I take a lot of interest in the industrial revolution because I used to earlier work on child labor, and as everyone knows the industrial revolution was a period of grotesque child labor that was eventually brought down the industrial revolution actually gives me hope when I was used to be at the World Bank, people would tell me why do you worry about our current technological changes because we came out of the industrial revolution fine, and we've done better. To that my response was we came out fine, but we need not have. We came out fine because of radical thinking, which we now don't recognize enough. Let us say from 1750 to 1850 1860 the period of the industrial revolution speak. We first of all have radical ideas of economics economics is transforming 1776 Adams with 1848 John Stuart Bill Karl Marx, a whole lot of people publishing material so this span is radical thinking and economics taking place then when it comes to policies, the acts that were coming in the factories acts from 1802 the 10 hour limit initially people would say what a huge imposition of the state on individual freedom that little children are not allowed to work for 14 hours a day, but those radical policies were brought in. That gives me hope that when you come to the brink that the world can be destroyed, people sit up and they put in their best minds together. It needs a combination of professional clear thinking and a moral compass. And that's where my hope is that today's trials are probably pushing us towards that. Do we want to go the dinosaur route where the dinosaur goes extinct, or do we want to take advantage of the fact that we are like dinosaurs with one major difference that we can self analyze which the dinosaur could not do. Are we living life the right way. So it's just a hope and a little bit of optimism that as we come out of this people will get together ordinary citizens they will bring their best ideas together, and we will reign in on the worst forms of inequality, because the kind of inequality that we have now cannot function. Also, the world will get captured by one digital firm can capture the whole world. If we do not ultimately think that we'll have to take steps. And, and here is one more piece of hope is in many places you've seen historically that the people who have done the best by the system have sympathize with the radical ideas. So there are very wealthy people who say that I will not voluntarily just give up all my wealth, but I want to work with you to restructure the world. So that we will not have people like me who are super wealthy with other people at the same time who are perishing. I don't want that kind of a world I don't want to voluntarily give up mine, but I want to create a better world. Eric Engels was the best example of that very very successful businessman, working with Karl Marx saying that we want to create a world where it'll be much more equitable than the world in which I have benefited hugely. I don't want that one. I have a little bit of hope for that even in the richer people who are sensitive to our needs. Let me turn to the questions that have come in. We only have about five minutes, but I have a question here from Robert Owen. To what extent would you concur that the international policy architecture risks being the victim of the current COVID crisis and what should be the specifics of an effective response. It will be a bit of a victim. The structure is breaking down. The leadership that earlier used to come from the United States with all its faults. The US has also done dreadful things in many places, but it was providing a central global architecture that is breaking down. I have a feeling it's going to break down and it has to reconstruct again a little bit of hope I have is in collective movements, citizens across the world like we have groups like amnesty. Also the international media, which is not government giving you the global structure of institutions, but it's individuals, it's small groups, activists who are getting together. I think that we are going to see a bit of a new architecture of the global interweaving. Earlier the governments were providing that that's breaking down, but a new form that could happen with citizens connecting with one another which is now increasingly possible because of new technology. Again, all this is I'm speculating into 2030 years and fingers crossed that we will be able to solve some of these. I have Thank you. Some call this an epic period for the wealth transfer due to asymmetric job loss shareholding and lubing urban urban decay and automation risk. Can you speculate which trends may return and which may not and what the post COVID normal will look like. It is a time when there is a transfer taking place. The poorer people who are lost jobs who don't have savings to tide over this period are being hit very badly and these are statistics that we will get only after a long stretch of time because we do know that when death rates go up in poorer countries. People don't die standing in a queue. It is malnourishment begins to increase. So these things we will gradually get and there's already numbers coming that poverty is increasing. So will we be able to reverse this trend. My view is this trend is not viable. So if we can't reverse it, it's like environmental decay. It's going to destroy the world if inequality from where it is. If it begins to continue to rise. The world will be politically completely afraid and we will not have a have a viable economy anymore. So yes the natural tendency coming out of the pandemic is for the inequality to increase and it is increasing right now. But once again my hope is that just like the environment we have taken the world to the brink and now we are beginning to see a little bit of sense and pulling back inequality the natural tendency of the market is not good. We have to reverse that one more thing I'll take advantage of this question to point out the invisible hand. Do we allow it to be all free market or not the most foolish thing you can do is again think of this as an ideological thing. Either everyone everything is free or nothing is free. It has to be a mixture of top down regulations and rules and a lot of freedom for space and my own preferences minimum government but a government that transfers income from the rich to the poor and then does not interfere too much in our everyday lives. Let me take one more question by orchard lemon I'm sorry if I'm mispronouncing the name. Thanks a lot for this interesting talk. I wonder how your forecast that the it education and health sectors will grow on the one hand and on the other hand you point to the competition on product markets and its impact on the global order. The sectors you see is growing are all service sectors and most economies are already dominated by their service sectors. So how can the product market stay so important. The product markets will relatively probably become smaller but even a lot of service products have a lot of components to that. There is literally the laptop that you're using a lot of physical parts of it. So those are sectors that will continue to grow with this and also the manufacturing sector the industrial sector is not going to close down. It's going to grow slower on that the scope for one country to be replaced by another is huge. If United States today says that we are not going to use any of the cheaper inputs and labor as well in the world. Even if the product market is not growing in a big way if China comes and displaces United States from the product market altogether the US economy is going to collapse. So I do believe that the world is going to become more digital and very different kind of a world where we will be consuming other kinds of products. I like to believe we will consume better health. More philosophy more literature more arts more of the creative things we will take in but all those also have components and closed economies I feel absolutely certain will fare was and become marginalized in the new world that will emerge. Okay, well we're out of time Kaushik. Thank you so much for taking the time to come in and talk with us this morning and for bringing a somewhat more optimistic view than I think many of us are used to hearing at a time like this. It's nice to hear someone who believes in the better name angels of our nature. So thanks once again, and I want to thank also all of the all of you who tuned in from all around the world. Many of you actually sent in questions about climate change which we didn't address in this seminar but next Thursday, our discussion will be all about the impact of the pandemic on climate change so please register for next Thursday's webinar at the iNet website and I hope to see you all then. Thank you again.